Alternative Investment

Democratizing 401(k) Access to Alternative Assets: What Fund Managers Should Know

On August 7, 2025, the White House issued an Executive Order aimed at enabling 401(k) and other ERISA-governed defined contribution plans to include alternative assets, including private equity, real estate, and cryptocurrency. The order directs the Department of Labor, Treasury, and SEC to reassess fiduciary guidance and craft regulatory updates that would permit plan sponsors to offer these asset classes. Per the administration, the EO aims to “democratize” access to investments historically limited to institutional and high-net-worth investors.

What does this mean for fund managers (especially those in private markets and digital assets)? While the full impact may not be clear for some time, managers should view President Trump’s order as a signal for potential long-term market transformation and navigate accordingly.

Key Takeaways for Fund Managers

1. Redefining Opportunity

By explicitly including alternative asset classes including private equity, digital assets and more, the Order indicates a long-sought legitimization of products traditionally siloed in institutional portfolios alone. For fund managers, this means retail-level capital is now on your watchlist. It’s time to think strategically about accessibility, scalability, and packaging.

2. Regulatory Tailwinds and Timelines

The Order mandates that, within 180 days, DOL must reassess prior guidance and propose new, fiduciary-aligned frameworks and safe harbors. Meanwhile, Reuters underscores that although this framework now exists, real-world implementation will take time, as plan providers proceed with caution. Business Insider similarly highlights that private equity’s opacity, long lock-up periods, and crypto’s volatility could expose plan sponsors to heightened scrutiny and fiduciary risk. Law360 further frames this as a pivot from limited inclusion (e.g., small private equity allocations) toward broad-based inclusion across numerous alternative categories, a departure requiring robust risk frameworks.

3. Balancing Growth Potential Against Fiduciary Risk

• Private equity: Long-term net returns (~13% since 1990) have outpaced public markets (~10.6%), but high fees, illiquidity, and valuation opacity demand rigorous due diligence.
• Cryptocurrency: Potential diversification benefits are tempered by extreme volatility, evolving custody solutions, and uncertain regulatory treatment.

In both cases, fiduciary standards remain paramount. Plan sponsors and asset managers must be prepared to justify inclusion under ERISA’s “prudence” and “loyalty” tests.

4. The High-Stakes Advantage of Early Structuring

Early movers can define the structured access models: target-date funds, diversified multi-asset collections, or managed accounts with clear governance and fee transparency. According to Kiplinger, private assets can meaningfully enhance retirement income, adding four or more years’ worth, if well integrated. Still, the challenge remains ensuring high-quality vehicles that meet operational, legal, and educational standards.

Fund Managers Must Lead the Charge and Set the Tone Going Forward

As fund managers in the alternative investment space, you are not just observers but architects of this transformation. As such, crafting scalable, transparent, and compliant delivery models is imperative, not optional. For sponsors and fiduciaries to trust your offerings, your frameworks must speak to prudence as much as performance.

We’re unlikely to see meaningful adoption overnight. However, those who act now, investing in product readiness, education efforts, and fiduciary-aligned design, will position themselves at the front of the pack: both as participants in this change, and as the leaders guiding the way.

Your fund’s future depends on decisive, informed leadership.

Connect with our Alternative Investments specialists and put expert insight to work for your executive strategy.